Friday, October 23, 2020

Business tycoon Steinmetz loses bid to overturn $2 billion bribery case

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Diamond magnate Beny Steinmetz has lost a $2bn (£1.6bn) legal battle with Brazilian mining giant Vale.

His business BSGR had been ordered to pay Vale the sum in compensation over iron ore assets in Guinea that were taken away amid corruption claims.

BSGR had appealed the decision, but this morning its argument was rejected at the High Court. Judge Sir Michael Burton said it was lacking in merit.

Sir Michael said the London Court of International Arbitration panel that made the original award in April had acted fairly, despite BSGR’s claim that it had showed apparent bias.

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He said: “I am satisfied that there is no apparent bias, no procedural irregularity… and no substantial prejudice has been done.”

BSGR has been under control of administrators at BDO since March 2018. Its parent company, Nysco, said it stood by its position and vowed to “continue to pursue justice”.

The decision marks the latest twist in a long-running saga over one of the world’s best untapped iron ore reserves.

BSGR was awarded rights to mine the lucrative Simandou iron ore deposit by former Guinean president Lansana Conte in 2008.

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It brought in mining giant Vale to help develop the assets, with the Brazilian company paying $500m upfront with a further $2bn to come.

Vale took BSGR to the the arbitration court, which found in Vale’s favour and ordered BSGR to pay $1.2bn in compensation plus interests and costs, amounting to $2bn overall.

In the meantime, BSGR had taken Guinea to international arbitration to try and get the rights back. But it dropped the case earlier this year as part of a controversial deal in which Guinea agreed to end corruption claims against BSGR.

A Chinese-backed consortium was awarded rights to mine Simandou this month.

Meanwhile Mr Steinmetz, whose family made its fortune mining and trading in diamonds, is involved in a new plan to develop Zogota, a former BSGR prospect close to Simandou.

The company working at Zogota, called Niron, is headed by Sir Mick Davis, the former Xstrata chief executive and ex-Tory party treasurer.

BSGR has always denied any corruption. Parent company Nysco labelled the High Court decision disappointing and added: “We rigorously maintain that the London Court of International Arbitration procedure was biased against BSG Resources.

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